Q. 184.7( 3 Votes )

How can money be

Answer :

1. Money as a standard medium of payments can easily be exchanged for any commodity or service because transactions involving money only involve the use of money which in turn is very convenient as against the double coincidence of wants.

2. For example – If a shoe manufacturer wants to sell shoes in the market and buy wheat, he would first exchange shoes that he has produced for money and then exchange the money for wheat. However, in case of double coincidence of wants, he would have to first find a wheat growing farmer ready to exchange his wheat for the shoes, which is a much difficult task.


3. Money, therefore, removes the difficulty created by the double coincidence of wants and people can sell their goods without looking for the person willing to buy their goods and give exactly what they wish to buy. Money is, thus, the most convenient and time-saving medium of exchange.


NOTE – Money, as a medium of exchange, not only acts as a convenient mode of payment but also provides the option of transfer of money during a period of time with the promise of repayment later (loans).


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